Mary Holm: Bank on Consumer NZ for useful tips

Website rates companies on specific areas, including banking via the internet, phone and at branches.

The best source for information on the financial strength of high-street banks is the Reserve Bank's website. Photo / Sarah Ivey

Since coming to New Zealand about 10 years ago I have been a National Bank customer. Back in the UK I had been with Lloyds Bank for many years so it was natural to go with the "Black Horse".

Now the National Bank brand is going and I feel no loyalty to ANZ, so it seems the right time for a review of my banking. I suspect ANZ may have shot itself in the foot by ditching National instead of developing it as a "premium" brand.

What is the best website or other resource for evaluating banks? I note that the Kiwi-owned banks (Kiwibank and TSB) come out well in satisfaction surveys, but TSB branches and ATMs are relatively thin on the ground, and I wonder with Kiwibank how easy it is to access more complex services when it is using post office staff as its "front line".

Not having the profits going to Australia is a plus point, but what about the financial strength of the banks? I'd love to have your thoughts.

My favourite website for comparing many products and services, including banking, is consumer.org.nz, run by Consumer NZ.

It gives basic information about all sorts of topics, but you have to pay to join to get more. Still, it's well worth joining. Consumer does wide-ranging research, including testing products and surveying members.

If I'm planning to buy something, I find the website particularly useful for narrowing down my choices and also for pointing out features to take into account - often things I wouldn't have otherwise thought of.

On banks, Consumer NZ surveyed more than 13,000 members in August. It found that the small banks - the Co-operative Bank, Rabobank and TSB - all received 100 per cent for overall satisfaction. Not far behind were two other small banks, SBS and Kiwibank.

Out of the big banks, ASB did best, followed by BNZ then National, Westpac and BankDirect. You'll be interested to know that ANZ came last, although it still had 86 per cent of customers rating it "good" or "very good".

The average rating for all banks - 92 per cent - was well up from 84 per cent in 2007. It compares with averages of 78 per cent for electricity companies, 72 per cent for ISPs, and 55 per cent for appliance retailers.

So, despite all the complaints, most people are happy with their bank.

Depending on how you usually bank, you may want to note these rankings, which in some cases are quite different from the overall rankings.

There's also a separate report on bank fees, and various other useful info, including "Things the bank won't tell you" and useful tips on switching banks.

On the financial strength of the banks, the best source is the Reserve Bank's website, rbnz.govt.nz, which lists New Zealand banks' credit ratings. Of the main banks, Rabobank NZ has the best Standard & Poor's rating, of AA. That's followed by ANZ National, ASB, BNZ and Westpac, all rated AA-minus. Next is Kiwibank with A-plus.

Then comes TSB with BBB-plus and The Co-operative Bank with BBB-minus. SBS doesn't have a Standard & Poor's rating; it does have a BBB rating from Fitch, which is similar.

It's likely that the big banks have higher ratings because of their overseas connections. It's not all bad having a link to the Aussies or other overseas banks! Still, a BBB rating is said to be "adequate" in terms of "capacity to make timely payment". So our smaller banks don't seem to be worrying the credit ratings services.

The difficulty with comparing mortgage rates is that, at any given time, one bank might seem cheaper because it has just lowered its rates, but other banks might follow the next day with bigger rate cuts.

The only way to judge which bank tends to have lower rates is to look over several years. And mortgagerates.co.nz has a tool to do that from 2002.

Go to tinyurl.com/nzmortgg and scroll down to "Advanced mortgage rates comparison". Click on the banks you want to compare, holding down "Control" or "Alt", or perhaps something different on your computer, to get several banks at once. You need to also scroll down to see the resulting graph.

A few comments on your specific worries:

I wouldn't exclude a bank because it doesn't have many ATMs. Ask them about it. You'll probably find you can use other banks' ATMs. There may be fees, but they might not amount to much.

Does having branches matter? How often do you go into yours? I almost never do.

On the competence of bank staff compared with post office staff, I can't see why one would be better than the other for front-line work. For more complex services, I expect every bank has staff with more expertise.

Being frugal

I have a degree of sympathy with the letters last week regarding frugality. I have always been rather frugal, preferring to spend my money on study, travel, reduced hours and buying my own home rather than material possessions.

When I met my husband (we were both 40) he was in debt to the tune of $40,000 due to a divorce and poor money choices. We started a family and a business and our income is now $300,000 a year.

But frugal ways die hard. I just dislike wasting money, and still buy clothes at cheaper outlet shops, buy cheaper cuts of meat, etc, and find it hard to spend more than $12 on a bottle of wine.

We like more basic holiday accommodation (it's more of an adventure), recycle where possible and sometimes buy secondhand goods.

Not surprisingly, we are saving over $10,000 a month. At least with the extra income we are now finding we are addressing expensive health issues that had been put off, and it is neat to be able to help other people in need. It is fabulous to have choices in life.

It seems that many of our attitudes to money are set from childhood. We don't necessarily do what our parents did - we might do the exact opposite. But by the time we are young adults, we're either spenders or savers, and it may not be easy to change that.

In your case, why should you change? You sound perfectly happy with your cheaper meat and wine, and it seems that you're generous to others. So good on you.

The worry, of course, is for the spenders who don't have an income to match their spending.

"The Block" tax worry

I am concerned for the winners of The Block NZ, a very nice looking brother and sister team, who earned $157,000 from their do-up of the Takapuna home.

This would have to be a venture entered into for the purpose of making a profit and therefore 100 per cent taxable, I would think.

I wonder if they have been advised of that, because with the publicity earned, the IRD would have no problem checking their returns in due course. And knowing their slowness, it would be awful for the brother and sister to get assessments for approximately $50,000 plus penalties and interest in a few years' time.

If the pair haven't yet been warned, hopefully this Q&A will do the trick.

Asked if Inland Revenue keeps track of people who are in the public eye for making gains, a spokesperson replied - predictably - "We cannot comment on specific situations due to taxpayer confidentiality, including commenting on any assessment as this would depend on the specifics of an individual taxpayer."

The spokesperson does say, though: "If a property is purchased with the intention of resale to make a profit, or as trading stock for a business, there are likely to be tax implications on any proceeds, irrespective of how long a seller has held that property or how any proceeds are distributed."

Your comment about the possibility of the brother and sister being "caught" several years down the track has credibility, as you are a chartered accountant. But Inland Revenue wouldn't comment specifically on that either, saying only: "Each case is considered on its individual circumstances, and as tax laws can be complex, customers should seek advice regarding their obligations."

Hopefully the brother and sister, and anyone else in the TV programme who made a gain, will do just that.

And while we're issuing warnings, the department adds: "As part of our compliance programme, we have been working to raise awareness about income from property transactions and to educate people across the country about their tax obligations.

"We will continue to concentrate on areas of potential property speculation, such as land banking, off-plan sales and property swaps."

As a first step for information about tax on property gains, people can go to ird.govt.nz/property/index.html. For more detail, go to tinyurl.com/taxonproperty for an easy-to-read guide with lots of examples.

Lump sum investment

My daughter received a lump sum for her 21st and is not sure where to invest it.

She has a smallish student loan which, if paid off while working, should be cleared in a couple of years, and no other debt. She is used to the student loan payments and therefore they are not an issue in her monthly income.

Is it possible to put a lump sum into KiwiSaver? If so, is this money then tied to the same terms and conditions as monthly regular payments? Will it be part of any withdrawal in a couple of years if she chooses to buy a house?

You can put a lump sum into KiwiSaver, but it's treated like all other deposits. That means the money can be withdrawn before retirement only if you are buying a first home or experience financial hardship, serious illness or permanent emigration, or upon death.

If your daughter is sure she wants to use the money to buy a first home, there's no good reason not to put it in KiwiSaver. But if she might use it for something else - perhaps to start a business or set herself up overseas or do an advanced degree - she should keep the money somewhere more accessible.

If she likes the way her KiwiSaver money is invested, she could ask if her provider has a similar non-KiwiSaver fund. Or, if she expects to spend the money within a few years, bank term deposits should do the trick.

* Mary Holm is a freelance journalist, part-time university lecturer, member of the Financial Markets Authority board, director of the Banking Ombudsman Scheme, seminar presenter and bestselling author on personal finance. Her website is www.maryholm.com. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary's advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to mary@maryholm.com or Money Column, Business Herald, PO Box 32, Auckland. Letters should not exceed 200 words. We won't publish your name. Please provide a (preferably daytime) phone number. Sorry, but Mary cannot answer all questions, correspond directly with readers, or give financial advice.

Mary Holm is a columnist, best-selling author and seminar presenter on personal finance. She is also a director of the Financial Markets Authority and the Banking Ombudsman Scheme, and holds an MBA in finance. Previously she was business editor of the Auckland Sun and Auckland Star, and has worked for the NZ Listener, Australian Financial Review and Chicago Tribune. She has been called “The nation’s favourite investment agony aunt.”